Friday, May 29, 2009

WMT Call Calender - Follow Up

WMT Closed today at $49.74

My limit order was filled today for a net debit of $1.40 per share...

Description: JUN 52.5 Call/SEP 52.5 Call
Stock: 49.74
Quantity: -10 / 10
Cost Basis: $1.40
Price: $1.43
Value: $1,430.00
Gain/Loss $: 30.00

I am looking for a 30% ROI... This means that I need the "Price" (in bold) to = $1.82

The fill price of the long call was 1.61 and the short call was (0.21)
What this tells me is that if the stock remains stagnant (FLAT) at 50 per share, than the long call will lose a little bit due to time decay (THETA) about $0.01 a day (given the current THETA value) and with approximately 21 days till June expiration that is about .21 cents...

...that is interesting, the credit from the June short call will just cover the theoretical loss due to time decay. Result, would be a break even point if the stock stays near the current trading price 49 - 50 till the closing bell on June 19th... This is good to know because it lets me know that the potential of being in this trade for another month is high...and that is just fine with me.

This is not the only thing I need to consider...if you have any questions or comments please let me know via email coachnuge@gmail.com
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